EMC 2008 Annual Report Download - page 75

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
the weighted average returns on invested capital and the risk associated with achieving forecasted sales related to the technology and assets acquired. The total
weighted average amortization period for the intangible assets is 5.8 years. The intangible assets are being amortized based upon the pattern in which the
economic benefits of the intangible assets are being utilized.
Of the $131.8 million of acquired intangible assets, $24.9 million was allocated to IPR&D which was written off at the respective dates of acquisition
because the IPR&D had no alternative uses and had not reached technological feasibility. The value assigned to IPR&D was determined utilizing the income
approach by determining cash flow projections relating to identified IPR&D projects. The stage of completion of each in-process project was estimated to
determine the discount rates to be applied to the valuation of the in-process technology. Based upon the level of completion and the risk associated with in-
process technology, we applied discount rates that ranged from 22.0% – 35.0% to value the IPR&D projects acquired.
Total IPR&D for all of these acquisitions and RSA was $35.4 million in 2006.
Pro forma Effects of the Acquisitions
The following gives pro forma effect as if the 2008 acquisitions, 2007 acquisitions and the 2006 acquisitions had been consummated as of the beginning
of the fiscal year in the year the transactions closed and the beginning of the prior fiscal year. The pro forma results are not necessarily indicative of what
actually would have occurred had the acquisitions been in effect for the periods presented (table in thousands, except per share data):
(unaudited)
Year Ended December 31,
2008 2007 2006
Revenue $15,074,509 $14,010,789 $11,655,856
Net income 1,315,703 1,601,632 1,049,664
Net income per weighted average share, basic $ 0.64 $ 0.77 $ 0.47
Net income per weighted average share, diluted $ 0.63 $ 0.74 $ 0.46
The pro forma impact on reported net income per weighted average share was primarily attributable to amortization of acquired intangible assets,
forgone interest income and IPR&D.
Intangible Assets
Intangible assets, excluding goodwill, as of December 31, 2008 and 2007 consist of (tables in thousands):
Year Ended December 31, 2008
Gross Carrying
Amount Accumulated Amortization Net Book Value
Purchased technology $ 913,531 $ (613,145) $ 300,386
Patents 62,170 (62,126) 44
Software licenses 72,263 (45,582) 26,681
Trademarks and tradenames 139,536 (44,620) 94,916
Customer relationships and customer lists 607,428 (240,875) 366,553
Other 21,003 (13,967) 7,036
Total intangible assets, excluding goodwill $ 1,815,931 $(1,020,315) $ 795,616
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